The Qui Tam Blog

ABC News Houston keeps qui tam attorney Joel Androphy on call when they need a legal expert. Here, Androphy shares his thoughts of the context of a local courtroom situation and how it may affect the jury’s decision. Read about the case, the trial, and what Androphy has to say in the article below.

Suspect’s Brother Kicked Out of Court During Testimony of Accused Cop Killer’s Trial
The trial of a man accused of killing a Houston police officer entered its second day of testimony, but Tuesday the biggest drama came when one of the suspect’s family members was asked to leave the courtroom. Read More

New financial reform legislation before Congress would allow an increase in multi-million dollar awards to whistleblowers. Ideally, this would create an environment where companies are pressured to report misconduct earlier and where whistleblowers will see the reward in bringing fraudulent activities to light.

Under the new law, the Securities and Exchange Commission would be required to award whistleblowers 30 percent of the total retribution or settlement gained from prosecution of the fraudulent company.

The False Claims Act had similar goals, although without the minimum reward requirement that would offer whisteblowers and lucrative and tangible incentive to report their company’s wrongdoings. Many experts agree that this type of incentive would go a long way toward convincing wary potential-whistleblowers who are afraid of losing their jobs or facing similar retaliation from the company they report. With significant financial incentive, blowing the whistle on misconduct gets a little easier.

Learn how the qui tam attorneys at Berg & Androphy have recovered hundreds of millions for the government and whistleblowers.

How much is Hurricane Ike’s cleanup really costing the taxpayer? It turns out that that costs may be more than you think for reasons that may surprise you. Joel Androphy weighs in on two examples “suspcicious” money trails following Hurricane Ike. See what he says about the following ABC News investigations that are currently underway.

Following the Money Trail After Ike
“It’s very suspicious. The circumstances,” said KTRK Legal Analyst Joel Androphy. Read More

Are Your Tax Dollars Paying for a Family Affair in Chambers and Liberty Counties?
“If the public has a right to bid on a contract, everyone has a right to bid. Number one, it’s fair. It gets the government the best price. And it gives everyone an opportunity to compete,” Androphy said. Read More

In an attempt to speed up civil fraud investigations in the U.S., Attorney General Eric Holder expanded the power of the False Claims Act by signing an order allowing U.S. Attorneys to issue civil investigative demands under the Act.

Civil investigative demand allows for a subpoena of documents, depositions and interrogatories. Currently the Justice Department can issue these investigative demands before it files a complaint or before signing on to qui tam litigation. This makes the information accessible before the potential defendant can conduct its own discovery.

Until this year, the Attorney General could exclusively approve civil investigative demands. Because of this limitation, they were not common. Last spring, however, an anti-fraud bill made its way through congress and subsequently established the practice of allowing the Attorney General to delegate the power to Assistant Attorney General for the Civil Division. In a further expansion, Attorney General Holder also allowed Assistant Attorney General Tony West to redelegatee such powers to U.S. Attorneys, with notice and reporting requirement.

Last month, ABC News consulted attorney Joel Androphy on the costs that Toyota will be facing, following the significant number of car malfunctions that have left Toyota drivers injured, scared and distraught. See what he has to say in this article about a legal case involving an injured Toyota driver who experienced sudden acceleration and accident.

Local family files lawsuit against Toyota
…”Toyota is going to have to set aside billions and billions of dollars in order to compensate consumers, not only from just traffic accidents but everything from the value of the car to fender benders to people’s emotional damages,” said KTRK Legal Analyst Joel Androphy. Read More

Laidlaw Transit, Inc., a company that provides busing services to California school districts, is being challenged by the First District Court of appeals on the basis of a Qui Tam case brought by plaintiffs claiming that the company falsified safety records and failed to meet state safety and environmental standards.

Because Laidlaw accepted payment while allegedly breaching the contract held with the city, they are liable under the False Claims Act. The case had previously been dismissed but has been revived by the Court of Appeals.

The case was brought to court by a private individual with knowledge about Laidlaw’s supposed misconduct. If Laidlaw is charged with damages in this case, the whistle blower will be awarded some of the money under the False Claims Act.

The past few months have seen a dramatic increase in Qui Tam cases based on the false-marking section of the Patent Act. This section of the Act allows for whistleblowers to bring a company to court for falsely marking products as being patented or patent ending. If the company is found guilty of falsely claiming patent, the whistleblower and government receive compensation, as outlined in the Patent Act.

A recent case, Forest Group, Inc. v. Bon Tool Co. interprets the false-marking section as incurring a fine of $500 for every printed instance of false patent claim. Previous cases had interpreted the section to mean that a $500 fine should be incurred for every intention of falsely marking a product. The older interpretation was less harsh on manufacturers, whereas the newer interpretation in the Forest case offers hefty incentives for whistleblowers to turn in companies they have found to be fraudulently marking products.

The $500 fee is not automatic nor required. District courts are allowed to strike a balance in cases where mass-produced smaller items have been marked. For low-cost items, an $500 fine per item might be too steep and disproportionate to the benefits garnered by the company that fraudulently marked the product. Still, the potential of up to $500 in fines per item is enough to discourage companies from fraudulently marking future product and is more than enough to cause a substantial and steady increase in Qui Tam cases by whistle blowers who are ready to hold companies accountable for their patent law violations under the new interpretation of the Patent Act.

A qui tam case filed in the Texas Northern District Court by a patent watchdog group (The Patent Compliance Group, the PCG) against Activision Video Game Products, the firm that owns the Guitar Hero line of video games and video game products, accuses the company of patent law infringement.

The lawsuit accuses the Activision brand of improperly labeling its products with the patent and patent-pending notation used to protect brand names from copyright infringement. The case involves provision 35 U.S.C. 292(a) which establishes that, “”… whoever marks upon, or affixes to, or uses in advertising in connection with any article the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public – Shall be fined not more than US$500 for every such offense (in this case per item sold).”

Even though Activision does have some patents currently pending, PCG claims that the patents the company has filed do not cover the scope the packaging notation has claimed.

A Qui Tam suit has been brought against J-M Manufacturing Co and Formosa Plastics Corp, the manufacturing company’s previous parent company. Four states, twenty-one water districts and twenty-two cities in California have brought the lawsuit following reports that J-M Manufacturing had been supplying sub-standard PVC pipe.

The suit accuses J-M of taking several “cost-cutting” measures, including producing inferior quality PVC pipe, filling supervisor positions with inexperienced workers and providing independent quality-testers with a higher quality sample of product than what was actually being provided to customers.

For cities using these PVC pipes for water management, inferior quality product means a bad investment in public infrastructure. John Hendrix, who worked as an engineer in the J-M’s product assurance department, blew the whistle on the manufacturing company’s product quality issues and was reportedly fired by the company a week later.

The suit states that Hendrix’s employment was terminated after he wrote a memo to upper management informing them that the tensile strength of the PVC pipe being supplied was below the certification agency standards provided by Underwriters Laboratories, Inc.

Earlier this week AtriCure, Inc. executed a settlement with the Department of Justice in a case brought to court by a relator in 2007. AtriCure, primarily a manufacturer of cardiac surgical ablation systems, settled with the Department of Health and Human services for $3.8 million plus interest covering a five year period.

The case was filed in the United States District Court for the Southern District of Texas and charges AtriCure in violation of the Federal False Claims Act. By using illegal kickbacks and sponsoring non-branded marketing, AtriCure coaxed medical practices into favoring the corporation’s costly in-patient cardiac surgical ablation procedure over a clinically more effective out-patient catheter process.

Compensation for the costs incurred to Medicare because of the more costly treatment being falsely preferred are being sought by the relator and the Department of Justice on behalf of the Department of Health and Human Services.

In a press release earlier this week, the Department of Justice stated that this case is part of a larger movement to fight healthcare fraud. In the last year alone, the legal jurisdiction granted by the False Claims Act has been used by the US Government to recover approximately $2.2 billion in cases of fraud towards United States health care programs.